ISSUE #20
THE FACTORY FORWARD · 13 OCT 2026
5 MIN READ · DESIGNED TO RUN IN 30
Your scrap rate. Counted, or remembered?
THE PROBLEM
Last week I promised you your own baseline. Every vendor asks the same thing: “What is your scrap rate today?” If the honest answer is “about 2 or 3 percent”, it’s from memory, and nobody can beat, check or bill against a number from memory.
THE MOVE
Paste one shift’s production log and rejection register into an AI assistant. It gives back one dated line: scrap %, rework %, and the rupees that went into the bin.
IT TAKES
30 minutes, one shift’s register, one number out.
ONE FIELD NOTE
A PUBLISHED CASE. Not a client. One auto-component SME in Gujarat, written up by its engineers in a 2024 journal paper. One plant, one month. Not an average.
WHAT HAPPENED
The company turns over about ₹8.2 crore a year. In January 2021 it counted every piece: 16,573 made, 193 rejected. 1.16%. That sounds small.
Then it put a rupee figure on each rejected part. ₹2,20,794 that month.
WHY IT WORKED
The percentage hid the money. Once each part carried its own cost, the plant could see where the rupees were going, not just how many pieces. A year later, after lean and Six Sigma work, rejection was 0.76% and the monthly cost ₹1,42,966, 35% less. The counting didn’t fix anything. It is the reason anyone can say the fix worked.
WHAT IT COSTS YOU TO SKIP THIS
At that plant, 1.16% was about ₹26 lakh a year (our arithmetic: one month × 12). If your number is from memory, you don’t know whether yours is ₹2 lakh or ₹20 lakh. And the next vendor who promises “20% less scrap” is promising 20% of a number nobody has counted.
WHAT WE KNOW
Factories are busier: India’s manufacturing PMI rose to 55.1 in September, a seven-month high, and input costs rose faster than in August. The average for the quarter was still the lowest since 2021.
OUR READING
Counting pieces is the easy half. Putting rupees beside them is the half that changes what an owner does on Monday.
WHAT WE DO NOT KNOW
What a typical scrap rate is for a plant like yours. We looked and found no reliable figure for Indian MSMEs, only single-plant case studies. And one shift is a snapshot, not a trend.
FACTORY FORWARD FIELD TOOL
The One-Shift Baseline
30 minutes · one shift’s records · one dated number
STEP 1
Take one full shift. You need two things your plant already keeps: the production log (pieces made, by part) and the rejection or rework register for the same shift.
STEP 2
Write down the material cost per piece for your top parts. Tally or the last PO will have it. Note how many shifts you run a month.
STEP 3
Copy the prompt below into your AI assistant. Put your records under “1. My records” (or attach a clear photo of the register page) and your costs under “2. My costs”.
STEP 4
Write the baseline line on the board by the line, with the date. That is the number every fix gets measured against.
ONE PROMPT TO TRY
Copy it. Fill in sections 1 and 2. Send.
1. Copy everything in the box below.
2. In your AI assistant, replace the shaded parts in sections 1 and 2 with your records and costs.
3. Send. Don’t change anything under “What I need”.
The short version, for a phone. The sheet has the full prompt, with extra safeguards.
# Scrap baseline from one shift
## 1. My records
[Paste one shift's production and rejection records, or attach a photo]
## 2. My costs
- Your material cost ₹/piece: [part ₹___, part ₹___, …]
- Your shifts per month: [___]
## What I need
Use only my records. No benchmarks, causes or fixes.
1. Read: list every row: part, produced, defect, quantity, scrap or rework. Mark unsure figures (?).
2. Gaps: list any count or cost that is missing, unclear or disagrees with another line. Mark it GAP. Leave GAPs out of the totals. Never fill them in. Crossed out and rewritten? Use the new figure, marked (?).
3. Numbers: per part and for the shift: scrap %, rework %, first-pass yield, scrap cost (scrapped × my cost). Show sums.
4. Baseline: end with this line, then say the real cost is higher:
> Scrap baseline, [date], [shift]: X% scrap, Y% rework, ₹Z material lost. About ₹[Z × shifts per month] a month.
The one line that does the heavy lifting: “Leave GAPs out of the totals. Never fill them in.” Leave it out and the assistant will helpfully work out the missing count from the supervisor’s total, and your baseline is a guess again.
Tested with Claude and Gemini. We ran it on a made-up register with a blank count, an unreadable defect name and a supervisor total that didn’t add up. Both left the blank out instead of filling it in. In Claude, a phone photo of the handwritten page worked too. If you leave the cost blank, it will tell you, not guess.
Which assistant? The one your company has approved. Remove customer names first.
The rupee figure is material only. Your real loss is higher.
THE ONE CLICK
The One-Shift Baseline, on one page
The full prompt, a one-shift tally sheet for plants without a clean register, and a box to write the dated baseline. Print it and put it on the line.
THIS WEEK’S NUMBER
83%
That is the share of manufacturers in FICCI’s latest survey who said their cost of production rose as a share of sales this quarter, up from 79% the quarter before. FICCI puts it down to raw material, energy, the rupee, logistics and utilities. When inputs cost more, so does the material in every piece you scrap.
Source: FICCI Quarterly Survey on Manufacturing, 6 Oct 2026. Survey of large and SME manufacturers, nine sectors.
ONE QUESTION
Reply with two numbers: the scrap rate you’d have said before running this, and the one you got. No names, no plant.
COMING NEXT TUESDAY
Orders are back and so are costs. Some of the orders you’re shipping were priced before the rise. Next week: which of your orders stopped making money at today’s input cost.
P.S. One shift is a snapshot. Run the same prompt on the same shift every week, with the same defect names, and in a month you have a baseline nobody can argue with, not even a vendor.
Until next Tuesday,
Sachin
Founder, Scalatris LLP · scalatris.com
FORWARD THIS
Know a QC head or plant manager who gets asked “what’s your scrap rate?” Forward this before their next vendor meeting.
SOURCES
1. FICCI, “Manufacturing Sentiment Rebounds in Q2: FICCI Survey”, Quarterly Survey on Manufacturing, 71st edition, New Delhi, 6 October 2026.
2. HSBC India Manufacturing PMI, S&P Global, 1 October 2026.
3. Zala et al., “Application of Lean Six Sigma Tools for Performance Improvement in an Automobile Sector SME”, SSRG International Journal of Mechanical Engineering 11(7), July 2024. One company’s results.